The Public Option
Tuesday, October 13, 2009
I recently started reading Robert Reich's blog. Reich tends to promote populist and progressive policies when politicians won't. His column from yesterday seems to have created a Democratic talking point that I have heard repeated in the last 24 hours.
Yesterday he took on the insurance industry's newest "study" which claimed one of the health insurance reform bills (without a public option) would raise costs. His column voiced further evidence of the need for a public option.
The Audacity of Greed: How Private Health Insurers Just Blew Their CoverRead and Discuss.
“The only reason these costs can be passed on to consumers in the form of higher premiums is because there's not enough competition among private insurers to force them to absorb the costs by becoming more efficient. Get it? Health insurers have just made the best argument yet about why a public insurance option is necessary.”
8 comments:
Won't get any argument for from me. I am still concerned that Obama's estimates for how much it will cost are too low, but I see the need for a public option and think it should be tried. I would expect the insurance companies to fight it.
I am tired of insurance companies (and other companies, like cable) talking about competition while there isn't actually any real competition.
I don't blame the insurance industry for complaining. Competition hurts their bottom line, and that's bad for them. It's simple economics, especially when dealing with a producer with no profit motive.
The thing that gets me mad enough to hit small animals with a stick is that people try to suggest the insurance industry has altruistic motives, and are merely concerned about the danger to the consumer. They're FOR-PROFIT BUSINESSES. They try to take more money from customers than they pay out in benefits and other expenses. They make billions of dollars. They pay CEOs tens of millions of dollars.
If the Federal government announced they were going to start producing and selling widgets, that would make it harder for my widget company (tentatively named "Too Widget to Quit, Inc.") to compete in the market. And I would complain. But if I started to bemoan the fate of the poor widget consumer because I would have to raise my prices to maintain my profit margins, no one would take me seriously as an advocate for the common good.
people try to suggest the insurance industry has altruistic motives
People really do this? I hate to sound like a pessimist, but I have a hard time believing almost any company having altruistic motives.
The only reason these costs can be passed on to consumers in the form of higher premiums is because there's not enough competition among private insurers to force them to absorb the costs by becoming more efficient.
What else is there to say beyond that? Reich hit it on the head. In fact, like B Mac alludes to , sometimes it's not even that insurance companies are inefficient; indeed, many have already maximized profits by cutting corners and finding administrative efficiencies.
Where it gets worse is in what else they use to become efficient profit-making centers: using statistics, blindly and without flexibility, to offer coverage (denying fat babies in Colorado coverage), and flat-out denying coverage to participants. They are already efficient machines.
That Colorado baby incident is a great example. The insurance company changed its policy. But only because the baby's dad is a fucking news reporter at a local tv station with the wherewithall to make a national story and viral internet meme out of it. Their reply was "oops, ha ha, it was an underwriting mistake."
This is insane. Even our non-profit insurance companies turn a huge profit; they just call it something else. Public option. No ifs, ands or buts.
As a semi-recent newcomer to working in the health insurance biz, I would have to agree. We are highly inefficient, yet at the same time have cut costs as much as possible to become as efficient as we can. Honestly, I would bet the bulk of the industry's cost baggage comes from maintaining and supporting legacy systems. Paper pushing is a big one, and the automated systems we use to replace paper are broken and clumsy. A new insurance company would have it so much easier, but who can start an insurance company from scratch? Which leads me to...
...how insurance companies will "gain" new efficiencies, especially if there's a realistic alternative. The same way corporate World already does it - M&A, mergers and acquisition. I don't know what kind of retarded stuff they teach in MBAs, but apparently economies of scale means "buy up everyone else that does a remotely similar thing to you and you'll gain customers while becoming more efficient". It's a joke, and my own company is a part of it. All you end up with is a jumble of units that do sort of the same thing, and a struggle to work together. But you can bet as the insurance industry gets more pressure on it to compete that's the way it will go.
The comment about health insurance companies being altruistic and concerned with their customers best interest hits home, too. They are for sure interested only in the bottom line. But on the other hand, why should they be? Insurance is really sort of a misnomer anyway. Sure, you want insurance for that catastrophic injury or illness. But really what we're looking for (and what we're sort of getting) is price control. We want a buffer so we don't have to pay $500 out of pocket for xrays, or $250 for a half-hour exam.
The medical industry provides a service in terms of medical care, why can't we deal directly with them? Middlemen are always the problem, they inflate the price, but in this case we're looking to them to *lower* it for us. Does it really take a team of 15 people and thousands of dollars to take and interpret tests or xrays or whatnot? Part of me wonders if we're dealing with the wrong side of the problem - healthcare is expensive, but is it because the medical providers are charging too much or because the insurance companies are padding the price too much?
I'm a BIG fan of Reich. Going to read right now.
I'll be bac.
Excellent stuff.
In addition to the part you quoted, Reich stresses that these companies aren't just protecting the bottom line and profits they currently have—no matter what plan passes, they stand to gain 30 million new paying customers worth of profit, and the STILL are looking to put the screws to everyone.
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